6. Energy and security: regional and global dimensions KAMILA PRONISKA I. Introduction The recent surge of debate about energy security and its place in international strategy and politics has often been compared to the impact of the first oil crisis in the 1970s. In reality, it has a different and more varied set of origins. Since the 1970s there have been changes in the structure of the energy market, the nature of energy security and the challenges to it, and the geopolitical environment. These changes all affect the understanding of what energy secur- ity is and what are the best national, regional and global methods of ensuring it. At the same time, states differ in their starting positions regarding energy security, and their energy strategies and policies are chosen under the influ- ence of broader economic, geopolitical and ideological calculations than was the case in the 1970s. This leads some of them to take a nationalistic approach to energy security, often including a readiness to use force (military or eco- nomic) to protect their energy interests. Other countries show more under- standing of the need for collective, institutional measures to ensure energy security. All these factors shape contemporary international relations in ways that go beyond the direct strategic and geopolitical dimensions of energy security as such. On the one hand, they may lead to new strategic alliances and cooper- ation between states that are major energy market players; on the other hand, they provide sources of international tension and conflict. Such conflicts in turn may include ‘resource conflicts’, where the ownership and supply of energy is itself the key factor, or they may be conflicts in which resources provide one of many catalysts without taking the central role. Only during the two world wars of the 20th century did these diverse links between energy and the traditional or military security agenda become as obvious and visible as they are today. They are now illustrated not only by the military presence of major energy consumers in the regions abundant in oil and gas, but also by terrorist attacks on the energy sector and by the growing concern with pro- viding military protection for energy infrastructure around the world. This chapter concentrates primarily on one small aspect of the energy secur- ity conundrum—the link between energy and the traditional security agenda. It focuses for the most part on concerns related to the production, use and supply of oil and gas, and on the external dimensions of energy policy. Energy secur- ity clearly cannot be reduced to oil and gas: the use of other energy sources SIPRI Yearbook 2007: Armaments, Disarmament and International Security 216 SECURITY AND CONFLICTS, 2006 such as coal, nuclear energy or renewable sources1 is equally relevant to enhancing a country’s energy security, and may also trigger energy security concerns. Nevertheless, the significance of oil and gas to the world economy and the fact that they are traded over long distances from a few major prod- uction centres to consumers scattered literally worldwide make them the main source of security-relevant competition, tensions, policy dilemmas and even conflicts. Section II of this chapter clarifies the meaning of energy security and the main components and processes that have affected analytical and political visions of the link between energy and security at different times. Section III looks in more detail at the evolving structure of, and trends within, the world market for oil and gas. Section IV considers the links between energy and international conflict, and section V reviews policy responses to energy secur- ity challenges that have been considered by states, groups of states and inter- national organizations up to the present. The conclusions are presented in section VI. II. A geostrategic approach to the security of energy supply Energy security—the availability of energy in sufficient quantities and at affordable prices at all times—is a complex issue. It brings together a variety of economic, geopolitical, geological, ecological and institutional factors, but also breaks down into multiple (global, regional, national and individual con- sumer) levels of reference and analysis. Analysts’ attempts to define energy security, and governments’ anxiety to ensure it, are both made more difficult as a result. In addition, one’s perspective on energy security depends on one’s position in the energy supply chain. For exporters the most important part of the concept is security of demand for their energy resources or, in other words, security of revenues from the energy market. Earning petrodollars is very often a prerequisite for producers’ economic security—and hence also for their own energy security. Most consumers, in contrast, focus their security concerns on the challenge of import dependency and the risk of supply dis- ruption. In major energy-consuming countries, accordingly, the key security issues debated include diversity of supply, access to energy resources (often entailing competition with other major energy consumers), stable oil prices, security margins for emergencies and the introduction of alternative energy sources. Other elements of the energy supply chain also interpret energy security differently: for commercial companies a main component of security is a stable legal investment regime in producer countries. Furthermore, the perception of energy security is in constant flux depending on the structure of the energy market, the state of consumer–producer rela- 1 Renewable sources of energy are those that can regenerate over time or cannot be physically depleted. Most renewable energy is ultimately obtained from the sun, either directly or indirectly in the form of wind power, hydropower or photosynthetic energy stored in biomass, known as a bioenergy or biofuel. Non-solar renewable energy is geothermal power generated from the earth’s heat. ENERGY AND SECURITY 217 tions, demand and supply trends, technological changes, and—not least—the fact or fear of energy crises, supply disruptions or price shocks. In practice, changes in perception can significantly affect both theoretical and practical approaches to energy security. Thus, energy analysts have not always per- ceived the significance of the geostrategic component in the same way.2 For example, during the 1970s the concept of energy security focused on geostrategic aspects—reducing import dependency and the vulnerability of imported supplies to disruption—and was narrowly viewed through the prism of high dependency on Middle East oil suppliers and the threat of supply dis- ruptions. In contrast, in the 1990s, when suppliers did not use energy as a weapon and oil supplies were plentiful at moderate prices, consuming coun- tries became more confident about oil and gas abundance and more aware of their own strength as consumers. Since the 1980s importers have felt able, for instance, to impose sanctions on some oil-exporting countries and to build multilateral response mechanisms for energy crisis situations. Analysts have turned accordingly to other aspects of energy security. Prime issues have included, first, ensuring greater economic efficiency through liberalization and deregulation in the gas and electricity sectors, and second, enhancing the pro- tection of the environment against threats generated by the production and use of energy, such as carbon dioxide emissions. At state policy level, changes in the content of the energy security agenda have also been reflected in changes in its relative priority among national and international concerns. The decisions taken by the Organization of the Petrol- eum Exporting Countries (OPEC) in 1973—to impose an oil embargo on those consumer countries that favoured Israel and to raise oil prices drastic- ally—provide perhaps the most spectacular example of an incident that lifted energy security to the top of political agendas.3 These steps had a truly shock- ing impact on Western countries that were highly dependent on hitherto rela- tively cheap and easily obtainable imported oil. On the one hand, they showed the vulnerability of the importers’ economies to disruption of physical oil sup- plies and to rapid price increases; on the other hand, the political character of the Arab countries’ decisions crystallized the notion of energy as a weapon, with its potentially asymmetrical impact on highly developed economies. One result was to force major importers to consider multilateral measures to safe- guard the future security of supply. For the first time in modern history energy security became an important issue of international debate, with results that included the creation of the International Energy Agency (IEA) and of multi- lateral response mechanisms to deal with potentially serious energy supply 2 For further discussion on this see Skinner, R. and Arnott, R., The Oil Supply and Demand Context for Security of Oil Supply to the EU from the GCC Countries, Working Paper/Monograph no. 29 (Oxford Institute for Energy Studies: Oxford, 2 Apr. 2005), URL <http://www.oxfordenergy.org/books. php>, pp. 22–31; and Skinner, R., ‘Energy security and producer–consumer dialogue: avoiding a Magi- not mentality’, Background Paper for Government of Canada Energy Symposium, Ottawa, 28 Oct. 2005, URL <http://www.oxfordenergy.org/presentations.php?1#>. 3 OPEC was established in 1960. Its members are Algeria, Angola (since Dec. 2006), Indonesia, Iran, Iraq, Kuwait, Libya, Nigeria, Qatar, Saudi Arabia, the